Q. What is the difference between the AB 811 standard PACE program and the SB 555 PACE program?
A: Both the Improvement Act (AB 811) and Mello-Roos Act (SB 555) authorize the creation of special tax districts and voluntary contractual agreements for financing energy and water efficiency projects between a lender and the property owner. However, the programs do differ for example:
- SB 555 program can allow up to a term of 30 years for a project such as solar whereas, under the standard AB 811 program financing terms may not exceed 25 years.
- SB555 does not restrict improvements on new commercial construction while AB811 was designed around already established residential properties.
- SB555 allows financing of publicly owned buildings while AB811 does not.
- AB811 does not allow for 4-unit residential buildings while SB555 does.
Q. What happens if the property owner fails to make their payments?
A: If a property owner fails to make a payment (i.e. pay their property taxes) they are subject to a lien on their property. The PACE providers are not directly involved in this transaction; the customers will deal directly with the mortgage firm on payment related issues.
Q. What happens when the customer decides to move and the property assessment has not been paid in full?
A: The property assessment remains with the property. The new buyer must be made aware of the assessment and may request the seller to pay off the loan amount as a condition of the sale; however market conditions may be the primary driver of who pays the remaining balance of the loan.
Q. Is it true that Fannie Mae and Freddy Mac will not provide financing to property owners who have a PACE lien attached to their property?
A: Fannie Mae and Freddie Mac have not officially endorsed PACE programs, however, CA passed SB-96 which sets aside $10 million to cover any losses for first mortgage lien holders, such as Fannie Mae or Freddy Mac as a result of a customer foreclosing or receiving a forced sale on their property. The PACE program establishes the PACE lien as “first lien priority.” Fannie Mae has stated that they will not purchase mortgage loans secured by properties with an outstanding PACE loan.
Q: If I install energy efficient equipment in my home through the PACE program, am I still eligible for the rebates offered by Anaheim Public Utilities?
A: Yes, if you install a qualified energy efficiency measure, you are eligible to receive a rebate through Anaheim Public Utilities.
Q: What improvements are eligible for PACE financing?
A: Generally, energy and water efficient products and renewable energy systems are eligible. Please explore the list of eligible products for more information.
Q: Am I required to complete an energy survey of my home to participate in the PACE program?
A: An energy survey is not required for you to participate in the PACE program. However, Anaheim Public Utilities offers this free service to all Anaheim residential customers as a great way to discuss ways to save energy with our conservation specialist. For more information or to schedule a Home Utility Checkup, please call 714-939-9020 or visit our web site.
Q: Are the contractors being used by the PACE providers licensed?
A: The City of Anaheim does not endorse any PACE program provider or third party PACE contractor. Contractors working in the program must possess valid licenses to work in the City of Anaheim. If you are unsure, ask your PACE provider information about the contractor working in and around your home, or check with the California Department of Consumer Affairs.
Q: How can I be sure that the improvements will provide me with savings on my utility bill?
A: Ask your PACE provider to provide the savings you can expect for the work they are performing in writing. Then check their references to see if other customers are satisfied with their bill savings. Please keep in mind that Anaheim’s rates are typically lower than surrounding communities, which may affect the bill savings estimate.
Q: Can PACE Financing be used for more than one project?
A: Yes, a property owner can finance multiple projects. However, all projects must be approved in order to make sure they meet efficiency standards.
Q: Are taxpayer dollars used to fund projects or administer the program?
A: No. Private capital is used to fund every project and the costs to administer the program are paid by property owners using the program through fees that are rolled into each project’s financing.
County tax assessors and tax collectors incur small costs to place each PACE assessment on the tax rolls and to collect and distribute PACE assessment payments. Counties are reimbursed for these costs through the above-mentioned fees. Cities do not incur any costs as a result of opting into the Program.
Q: Who may install PACE Financed products?
A: Only contractors registered with the PACE Program or a property owner who has signed a Self-Install Agreement may install PACE Financed Eligible Products. To register with the Program contractors must be properly licensed and bonded with the Contractors State License Board.
Q: Can I sell or refinance my home with a PACE assessment?
A: Properties with PACE assessments can be sold or refinanced at any point. Remaining PACE assessment balances may be paid off or may be able to be transferred to the new owner. Industry reports indicate that over 5,000 homeowners have refinanced or transferred the PACE assessment to the new owners at time of sale. Homeowners should be aware that lending criteria varies between lenders. Some lenders and/or buyers require the outstanding assessment balance to be paid off when a homeowner refinances or sells a home.
Q: How is the PACE Financing viewed in comparison to the Mortgage on the Property?
A: The PACE lien is of equal priority to regular property taxes on the homeowner’s property and senior to mortgage and other property related debt.
Q: What happens if the property goes into foreclosure?
A: In the event of the sale, including a foreclosure sale, of the property with outstanding PACE financing, the obligation will continue with the property causing the new homeowner to be responsible for the payments on the outstanding PACE amount. Proceeds of the sale will be applied first to delinquent tax payments including delinquent/unpaid PACE instalments. This may be waived or relinquished by a program administrator.
Q: What additional or specific paperwork should be considered when buying or selling a home with a PACE assessment?
A: There is typically no additional or specific paperwork required in order to facilitate buying or selling a home with a PACE assessment.
If the PACE project included a solar lease, paperwork transferring ownership of the solar equipment may be required by the solar leasing company. Please contact the leasing company for this paperwork.
If the buyer’s lender is requesting the PACE assessment to be subordinated under the first mortgage at time of transfer, please contact the Program Administrator.
Q: What if the energy improvements do not generate the promised savings for the owner? What if the energy improvements become in operable or ineffective before the financing is paid off?
A: The PACE Administrator, provides the administration and underwriting for the voluntary contractual assessment. PACE is not an energy savings performance contract. It is the financing mechanism to complete utility infrastructure improvements. If the contractor providing the project provides a performance guarantee to the consumer, that is between the contractor and the consumer.
Q: There are other companies offering PACE services– is there a need or benefit to homeowners to having choices in PACE Financing assessments?
A: There is always a benefit to have competition in the Market Place. Competition allows choice by consumers and will begin to self-regulate the market. Competition drives cost effective products, promotes quality and demands good customer service. PACE as an emerging industry is still feeling it’s way to creating a competitive market.